UNFAIR COMPETITION PREVENTION AND TRADE SECRET PROTECTION ACT REVISED

The Korean National Assembly recently passed a bill to revise the Unfair Competition Prevention And Trade Secret Protection Act. The revised Act will be effective as of July 2004. The revisions of the Act are provided below.

1) Prevention of Cybersquatting

A third party's registration, ownership, transfer or use of a domain name which is identical or similar to a name, trade name or trademark of well known persons or entities obtained for unjust purposes constitutes an act of unfair competition. Anyone who committed cybersquatting is subject to have his or her domain name registration revoked if he or she is found to have committed the cybersquatting act. The rightful proprietor of the domain name may lodge a civil damage suit against an alleged infringer and recovery of one's business reputation may also be requested before the courts.

2) Protection of Trade Dress

Assigning, leasing, displaying, importing or exporting goods that imitate a shape, pattern, color, gloss or a combination thereof of goods manufactured by another person will constitute an act of unfair competition. This newly adopted provision is expected to enhance the protection of trade dress in the Republic of Korea because trade dress need not necessarily be famous to be protected by this new provision. However, this new provision will not protect a trade dress of a product that has surpassed three years from the date of manufacturing. Furthermore, a well-known trade dress in the Republic of Korea will continue to be protected under the current unfair competition laws without any time limit.

3) Strengthening the Penalty on Industrial Spies

With semiconductors, cellular phones and LCD-related Korean technologies leaking into nations of foreign competitors, especially China, the Korean government has strengthened the penalty on industrial spies who leak information to foreign competitors. The Korean government explained that the damages incurred nationally by the industrial spies amounted to some 180 trillion US dollars. According to the previous Act, industrial spies were punishable by a maximum fine of US$ 83,000 even when they committed a crime of leaking trade secrets worth several trillion US dollars. The revised Act, however, strengthens the penalty by making the offense punishable by a maximum seven-year imprisonment and/or a maximum fine up to ten times the unjust profits earned by the offender.

In consideration of national security and economic policy reasons, trade secret infringement is to be classified as an offense subject to prosecution without the filing of a complaint. Further, a provision for regulating attempted infringement was newly adopted.

CLAIMS MAY BE RESTRICTIVELY INTERPRETED IF LITERAL INTERPRETATION THEREOF IS DEEMED ABSURD

(SUPREME COURT DECISION, 2001HU2856, JULY 11, 2003 )

Facts:   Mr. Daeho Kim obtained a patent on a harrow for tractors on March 11, 1999. The patent was eventually assigned to Daeho Agricultural Machine Manufacturing Company, where Mr. Daeho Kim was the president of the company. The patent includes an independent claim 1 and dependent claims 2 to 6. Claim 1 reads as follows:

Claim 1.   A harrow for tractors comprising:
        an upper frame (20) connected at a distal end thereof to an upper side of a rotor base (2) attachably and detachably mounted at a rear side of a conventional tractor (1) and adjusted at height thereof by a hydraulic cylinder;
        a lower frame (30) coupled to a bottom surface of said upper frame (20);
        a central harrow plate (40) integrally coupled to a rear end of said lower frame (30); and
        two external harrow plates (50, 60) connected to both ends of said central harrow plate (40) for 90 degree rotation toward the front of said tractor (1), wherein said central harrow plate (40) enables the entirety of said harrow plates ( 40, 50, 60) to horizontally swing via axles (21, 22) formed at a front and a rear side of the center of said lower frame (30).

    FIG. 1

    FIG. 5

The above FIGS. 1 and 5 are attached as drawings to the patent. The patent has a feature of enabling to rotate the external harrow (60) 90 degrees toward the front of the tractor as illustrated in FIG. 5.

The patentee sent a warning letter ordering Mr. Young Cheol Park to cease all infringing activities. Mr. Park was at the time manufacturing and marketing harrows for tractors in which the external harrow rotated 90 degrees toward the front via hydraulic pressure. Upon receipt of the warning letter, Mr. Park defended the patentee's claims by asserting that his product did not violate the subject patent and requested a trial on March 30, 2000 to confirm the scope of a patent right with the Intellectual Property Tribunal.

Decision:   The Tribunal rendered a decision on October 13, 2000 and held that Mr. Park's product did not violate the subject patent in the trial to confirm the scope of a patent right. In the appeal, the Patent Court confirmed the lower court's decision on August 30, 2001 and held that Mr. Park's product did not infringe the patent.

The patentee appealed again and the Supreme Court upheld the decision of the Patent Court. The Supreme Court concluded that "the scope of protection conferred by a patented invention shall be determined by the subject matters described in the claims, and it is possible to restrictively interpret the scope of claims when literal interpretation thereof is plainly absurd in light of the fact that a part of the literally interpreted scope of claims is not supported by the specification of the invention, or part of the literally interpreted scope of claims is intentionally excluded by an applicant in general consideration of the contents of filed technical ideas, other entries of specification, the intention of the applicant and the understanding of a third party."

The Supreme Court also noted that the restrictive interpretation of "means of connecting external harrows to both ends of said central harrow plate (40) so as to be rotated 90 degrees toward the front of said tractor (1)" in claim 1 as "construction of connecting said central harrow plate and said external harrow plate so as to be folded and unfolded using potential energy" was justifiable in consideration of the object, embodiments and effects entered in the detailed description of the invention.

Meanwhile, the Patent Court also noted that, "although the invention of claim 1 does not tangibly restrict a means of rotating the external harrow plate 90 degrees toward the front, it is justifiable to interpret that the configuration of a hydraulic cylinder used in the alleged product has been excluded from the protection scope of claim 1 in consideration of a fact that the background section of the patent describes that there have been two types of prior arts of folding both wings of a harrow, namely, a manually folding type and an automatic folding type; and the automatic folding type using a hydraulic system, which is operated under water, has a fatal mechanical trouble due to a foreign substance infiltrated into the hydraulic system, such as soil from a paddy field and the like."

Comments:   The present trial is noteworthy because according to the present trial, claims may be restrictively interpreted in special circumstances. The Supreme Court provided examples of restrictive interpretation of claims as: (1) a case where a part of the content of claims is not supported by the detailed description of specification while said part is included in the claims according to the literal interpretation and (2) a case where a part of the content of claims is intentionally excluded by an applicant from the protection scope of a patent right.

The present trial is considered to be the case of (2) since the protection scope was determined based on the description of the prior art in the specification. However, it is questionable whether it is appropriate to extensively interpret the description of a specification and consider same as an intention of an applicant.

Furthermore, the meaning of (1) is unclear. Nevertheless, the applicant should bear in mind that the description of the prior art may narrow the protection scope of a patent right after the registration of a patent and needs to be cautious in the description of prior arts.

In light of the decision of the Patent Court, if an invalidation trial had been lodged against the subject patent, it is highly likely that claim 1 would have been invalidated.

The present decision is believed to have been made in consideration of the limitations by the Korean courts, which cannot invalidate a patent in a trial to confirm the scope of rights or in an infringement trial. However, it is necessary to carefully take note of how other future cases will weigh the result of the present trial.

DAMAGES FOR COUNTERFEITED GOODS SOLD IN JAPAN NOT RECOVERABLE IN KOREAN COURTS

A Korean individual by the name of Mr. Park, who owns clothing shops in Seoul, Korea, sold 3,000 T-shirts and 5,800 jumpers bearing the counterfeited trademark "X-GIRL" through peddlers in Japan from August 2001 to November 2001. The mark is well known among consumers in Japan. Finding out that the counterfeited clothes were marketed in Japan, the Korean registrant of "X-GIRL" sought relief by taking the matter to the Public Prosecutors' Office of the Republic of Korea. The infringer was found guilty and received a penal penalty. The registrant also raised a civil lawsuit against Mr. Park demanding compensation of damages generated by the counterfeited items totaling US$ 400,000. The civil district court held in favor of Mr. Park.

In the appeal to the fourth Civil Division of the Seoul High Court, the Court affirmed the lower court's decision in the damage suit. The High Court noted that the appellant was merely a registrant of the trademark "X-GIRL" in the Republic of Korea and was not doing any business of manufacturing or marketing the goods, and ultimately the appellant cannot be considered to be injured of any actual damages by the appellee's infringement. The Court also went on to say that Article 2 and Article 3 of the Paris Convention prescribing that foreigners are entitled to equal protection of intellectual property rights as Korean nationals do not extend the effect of the Korean Trademark Act to foreign countries. The Court confirmed that the Korean Trademark Act is based on the principle of territorial privilege and Korean trademark registrations are effective, in principle, only in the Republic of Korea.

The present case confirms that the intellectual properties of the Republic of Korea is based on principles of territoriality. If an infringement lawsuit had been filed in Japan rather than Korea, the trademark proprietor would more than likely have prevailed in collecting damages.

NUMBER OF APPEALS FROM KIPO INCREASES

The number of appeals from the Korean Intellectual Property Office dramatically increased last year, thereby giving rise to an increased request of trials at the Intellectual Property Tribunal. The Tribunal announced that a total of 4,535 appeals were requested in the year 2003, an increase of 10.1% (417 cases) compared to 4,118 appeals in the year 2002. This shows a sharp rise in dissatisfaction over examination results of the KIPO in consideration of a mere 2% yearly increase of patent applications since 2000.

In particular, patent, utility model, design and trademark appeals were 1,881, 392, 305 and 1957 cases, respectively, which correspond to an increase of 18.8% for patents, 13.8% for utility models, and 7.6% for trademarks. There was a decrease in the number of appeals for design applications, however, with -12.6%. The increased number of appeals is likely due to an improved understanding of intellectual property rights from the applicants' perspective and deepening fierce competition among technologies.

The increased number of appeals is also likely to have resulted from careless examinations by examiners who are overloaded with examination cases. The number of examination cases allotted per patent examiner in the year 2002 was 342 compared to 197 cases for Japan, 76 for U.S., and 61 for European Patent Office, which manifest that Korean patent examiners are overburdened with patent applications.

One senior KIPO official has admitted that the KIPO is relatively short-handed in consideration of the increasing load of patent applications. However, the official went on to say that the number of examiners is being continuously augmented since last year to improve the high quality of examinations, and outsourcing of prior art searches have been further expanded to reduce the burden of the examiners.

Disclaimer: This newsletter is meant to inform our clients of IP developments in Korea. While every care has been taken to ensure the accuracy of this newsletter, it should not be relied upon before individual advice is obtained.